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Presentation and outlook of the Energy Business


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  • 1. INVESTOR DAYOctober 22nd, 2008 1
  • 2. Important disclaimerVeolia Environnement is a corporation listed on the NYSE and Euronext Paris. This document contains“forward-looking statements” within the meaning of the provisions of the U.S. Private Securities LitigationReform Act of 1995. Such forward-looking statements are not guarantees of future performance. Actualresults may differ materially from the forward-looking statements as a result of a number of risks anduncertainties, many of which are outside our control, including but not limited to: the risk of sufferingreduced profits or losses as a result of intense competition, the risk that changes in energy prices and taxesmay reduce Veolia Environnement’s profits, the risk that governmental authorities could terminate or modifysome of Veolia Environnement’s contracts, the risk that acquisitions may not provide the benefits thatVeolia Environnement hopes to achieve, the risk that Veolia Environnement’s compliance withenvironmental laws may become more costly in the future, the risk that currency exchange rate fluctuationsmay negatively affect Veolia Environnement’s financial results and the price of its shares, the risk thatVeolia Environnement may incur environmental liability in connection with its past, present and futureoperations, as well as the risks described in the documents Veolia Environnement has filed with the U.S.Securities and Exchange Commission. Veolia Environnement does not undertake, nor does it have, anyobligation to provide updates or to revise any forward-looking statements. Investors and security holdersmay obtain a free copy of documents filed by Veolia Environnement with the U.S. Securities and ExchangeCommission from Veolia Environnement. INVESTOR DAY October 2008 2
  • 3. Dalkia : Europe’s leading energy servicescompanyOlivier Barbaroux 3
  • 4. Europe’s leading energy services company A strong market position 4
  • 5. Dalkia in the energy chain GAS/OIL: ELECTRICITY: Generation Exploration, ProductionMAJOR ENERGYCOMPANIES Transmission Wholesale market Local production, cogeneration, biomass Distribution (heat, gas, electricity) Managing End users: homes, offices, public buildings, demand hospitals, industrial plants, shopping centres INVESTOR DAY October 2008 5
  • 6. Energy in the city CO2 INDUSTRIAL PLANTS Steam, electricity, compressedBUILDINGS: air, industrial gases, hot water,HVAC, chilled water, cooling, vacuumlighting, CO2electricity,lifts, safetysystems CO2 Central heating systems or cogeneration plants Hospitals NETWORKS Hot or cold water Steam Electricity Public lighting INVESTOR DAY October 2008 6
  • 7. Overall 2007 energy balance Energy savings 12.9 TWh 4.6Mt 20.9 Mt CO2 Savings Energy Services 12.7 TWh Renewables 6.9 TWh Coal 25.8 TWh Oil 4.2 TWh Heat 41.9 TWh Gas 53.0 TWh Power Other 4.9 TWh 14 TWh 95 TWh 69 TWh Fuel Purchases Transformation Energies & Services INVESTOR DAY October 2008 7
  • 8. Market leader in our business segments:local authorities Managing local authorities’ energy needs Revenue: €1.6bn* or 20% of total managed revenue for 2007** No. 1 in France (with 45% of the market) and Italy Serving 21,500 educational, cultural, leisure and sports facilities Serving 5,641,000 multi-family housing units. • From management reporting INVESTOR DAY October 2008 8 ** Excluding district heating and cooling systems
  • 9. Market leader in our business segments:district networks The world leader, managing 700 district networks Revenue: €1.9bn or 25% of total managed revenue for 2007* No.1 in Europe with 31% of the outsourced market Leading private operator in the USA, pioneer in China as operator of the Harbin and Jiamusi district networks Very large facilities: Lodz, Poznan (Poland), Vilnius (Lithuania), Ostrava (Czech Republic) Advanced technologies: network management software, optimized maintenance, ramp-up of biomass-fired plants. * From management reporting INVESTOR DAY October 2008 9
  • 10. Market leader in its business segments:industry 3,895 industrial facilities managed worldwide Revenue: €1.7bn or 22% of total managed revenue for 2007 * No. 1 in France (with 27% of the market) and the United Kingdom Strong positions in Italy, Sweden and Spain Fast-growing presence in Central and Eastern Europe Key to entry in potential markets. INVESTOR DAY October 2008 10 * From management reporting
  • 11. Market leader in its business segments: health 4,967 hospitals managed worldwide Revenue: €1.1bn or 14% of total managed revenue for 2007 * No. 1 in France (with 32% of the market) and Italy (21%) Strong positions in Sweden, UK, Spain, Latin America Fast-growing presence in Central and Eastern Europe Key to entry in emerging markets. * From management reporting INVESTOR DAY October 2008 11
  • 12. Contract description by business Operating Average size Average length margin 3 to 5 years without Building energy €100,000 to investment 3 to 10% management €5,000,000 8 to 12 years with investment 20 to 30 years District networks 8 to 15% > €5,000,000 Unlimited in certain countries 5 years without €500,000 to investment Industrial utilities 4 to 8% €5,000,000 10 to 12 years with investment INVESTOR DAY October 2008 12
  • 13. Dalkia: the leading energy services provider Estimated total European outstourcing market: €41bn 33% 27% 20% 17% 3% Dalkia IDEX and Power Facilities Electrical equivalents companies management construction & companies installation companies Several dozen ISS, Johnson Several dozen Controls, Faceo Bouygues, Vinci Compass, Eurogen Eiffage, Ferrovial GDF-Suez, Fortum, Jones Lang Cegelec, Siemens Vattenfall, EON, … Lassalle, … Spie, … Specialists Dominant energy No energy management skills producer model INVESTOR DAY October 2008 13
  • 14. Synergies within Veolia Business Tools – Diageo – Shared services centre in Lyon – PSA Trnava – Shared services centre in Germany – Cle (ArcelorMittal in Brazil) – Environmental research centre (CRPE) in France INVESTOR DAY October 2008 14
  • 15. Dalkia’s critical success factors The unique energy market environment The global issues raised by greenhouse gas emissions Strong skills in energy facility engineering and energy trading, backed by powerful R&D capabilities INVESTOR DAY October 2008 15
  • 16. Europe’s leading energy services company Adjusting to the financial crisis 16
  • 17. Financial performance €M 2004 2007 CAGR Turnover 4,948 6,896 +12% EBITDA 542 656 +8% EBITDA Margin 11 % 9.5% EBIT 255 388 +19% EBIT Margin 5.2 % 5.6% Employed capital 1,958 3,013 +12% ROCE before tax 10 % 11.7% INVESTOR DAY October 2008 17
  • 18. Action plan Concentrate resources on core activities – Close to core business – Reinforcing existing country positions – Arbitrage in high profitability projects Reinforce efficiency plan Reduce working capital Divest from non core activities Positive net cash flow (after investments and dividends) INVESTOR DAY October 2008 18
  • 19. Trends 2007 2011 (target) €M Turnover 6,896 + 5 - 7% EBITDA Margin 9.5% 12% EBIT Margin 5.6% 7% ROCE before tax 11.7 % 13 - 14% INVESTOR DAY October 2008 19
  • 20. Europe’s leading energy services company Favourable market trends 20
  • 21. Favourable market background Energy efficiency and renewable energies IEA – CO2 emissions (millions of tons) Baseline Emissions 62 Gt - 16% 6% Nuclear PowerCO2 emissions (Gt CO2/yr) 19% Fossil fuel power generation mix 21% Renewable energies Dalkia’s 54% energy efficiency business BLUE Map Emissions 14 Gt INVESTOR DAY October 2008 21
  • 22. Strategic focus on energy efficiency Long term practice in energy savings – Energy savings (+24.8% of savings from 2003 to 2007) – Global reduction of CO2 emissions (+28.3% from 2003 to 2007) Major ambition on global warming mitigation Renewables Wasted energy CO2 Global offer for use building Partnering with energy industry to Local Wasted modernize structuring energy use electricity IT Target : -38 % process generation in 2020 in and reduce CO2 France emissionsIsolation Steam (Grenelle) High performance hardware: INVESTOR DAY October 2008 22
  • 23. Strategic focus on renewable energies Biomass: European leader. Aiming for 13 Mt in Europe by 2015 – Priority targets: Europe, USA, Latin American Concentrated solar power – Targeting mainly Southern Europe, North Africa, Middle East INVESTOR DAY October 2008 23
  • 24. Very promising market outlooks Heating networks Europe: €17bn China and North America: equivalent Russia: 3 x Europe Local Authorities Europe: €30bn Potential outside Europe to be explored Industry Europe: €70bn North America: equivalent China and India: very strong potential Health Commercial Europe: €25bn Considerable potential throughout the world Europe: €90bn Similar opportunities in the Americas Growing opportunities in Asia and India INVESTOR DAY October 2008 24
  • 25. Focus on high-value-added projects Heating or cooling networks Biomass-fired CHP plants Deployment of photovoltaic, thermal and thermodynamic solar energy Stepped up focus on cogeneration Building energy refurbishment services Zero-carbon projects for industry Industrial park development Ramp-up of integrated hospital management solutions INVESTOR DAY October 2008 25
  • 26. Appendices 26
  • 27. Favourable market trends Climate change Without a massive reduction in CO2 emissions, climate experts warn that the pace of global warming will accelerate. INVESTOR DAY October 2008 27
  • 28. Favourable market trends 180 Soaring energy prices 160 140 120 Coal Ū/t 100 Price (Ū) Electricity Ū/MWh 80 Oil Ū/bl 60 40 Gas Ū/MWh 20 - 2002 2003 2004 2005 2006 2007 2008 2009 2010 INVESTOR DAY October 2008 28
  • 29. Strong growth potential Energy services market based on two scenarios Europe - €bn in constant euros €103bn Biomass Energy services €69bn Market size (in €bn) District networks €41bn 2007 2020 2020 Scenario 1 Scenario 2 Oil at $100/b Oil at $200/b INVESTOR DAY October 2008 29
  • 30. Investor Relations contact information Nathalie PINON, Head of Investor Relations and Financial Communication 38 Avenue Kléber – 75116 Paris - France Telephone +33 1 71 75 01 67 Fax +33 1 71 75 10 12 e-mail Brian SULLIVAN, Vice President, US Investor Relations 200 East Randolph Drive, Suite 7900 Chicago, IL 60601 - USA Telephone +1 (630) 371 2847 Fax +1 (630) 282 0423 e-mail Web site INVESTOR DAY October 2008 30